China's coal production capacity is expected to increase at a slower pace in 2024, as current supply is abundant to cover the demand, said Feng Dongbin, vice general manager of industry consultant Fenwei Digital Information Technology Co., Ltd.

 

As of the end of 2023, China's total coal mining capacity reached 6.2 billion tonnes per annum (Btpa), Feng said at the 2024 China Coal Import International Summit in Xiamen on March 8. Thermal coal accounted for 4.8 Btpa (77%), while coking coal constituted 1.4 Btpa (23%).

 

Feng Dongbin, Vice General Manager of Fenwei Digital Information Technology Co., Ltd.

 

In terms of production status, there were 4.9 Btpa of capacity in operation as of end-2023, with thermal coal at 3.9 Btpa (78%) and coking coal 1.1 Btpa (22%).

 

"The situation of capacity constraining supply in China has been generally eliminated," Feng said. "This would lead to a slower pace in coal mining capacity expansion this year."

 

In 2024, Feng expected China's thermal coal consumption to reach 4.1 billion tonnes, a 2.2% rise year on year. In comparison, the effective supply is predicted at 4.2 billion tonnes, leaving a surplus of around 100 million.

 

The potential balance between supply and demand would have an impact on prices. According to Feng, the price range for benchmark 5,500 Kcal/kg NAR spot coal at northern ports would be 850-950 yuan/t on a FOB basis with VAT. This compares with the annual average of 975 yuan/t in 2023 assessed by Sxcoal.

 

For coking coal, with the predicted supply and demand almost staying in balance in 2024, 596 million VS. 594 million tonnes as predicted by Feng, the prices would be generally unchanged this year, although volatilities in certain periods cannot be ruled out.

 

"Structural and periodic shortage would be eased but still persist," Feng said. "Price gaps between primary and blending coking coals will further widen."

 

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